Tuesday, August 14, 2007

Whole Foods vs. FTC just took an interesting turn

The Federal Trade Commission documents revealed that Whole Foods plans to close 30 or more Wild Oats stores, a move that the company believes would nearly double revenue for some Whole Foods stores.

The FTC also revealed how Whole Foods negotiates with suppliers to drive up costs for Wal-Mart Stores Inc. Regulators also discussed the company's closely held marketing strategies.

Regulators are trying to block the deal on antitrust grounds, arguing that it would mean higher prices for organic and natural food. A judge is considering whether to temporarily block the deal.

Many of the details in the documents, which FTC lawyers filed electronically, were not meant to be released publicly, but words intended to be redacted were actually just electronically shaded black. The words could be searched, copied, pasted and read in versions downloaded from court computer servers.

...With Tuesday's filing, the FTC threw open the window. Among the details cited in the government filing:

-- The opening of a Whole Foods store can cut revenue 30 percent or more in nearby Wild Oats stores.

-- Whole Foods set "ground rules" barring suppliers from selling directly to Wal-Mart. "It wants Wal-Mart to have to go through distributors because that raises Wal-Mart's costs," the document said.

-- Education is key to the site selection for a new Whole Foods store. "As a company, we look at college graduate density. That's one of the single most important things," the government quoted a company official as saying.

-- The takeover will send as many as 80 percent to 90 percent of Wild Oats shoppers to Whole Foods stores, according to Whole Foods documents cited by the government. "As a result, they will unambiguously be worse off," because of increased prices, the FTC argued. - AP